Why is the Evidence on Private Equity Performance So Confusing?

13 Pages Posted: 15 Jun 2011 Last revised: 27 Oct 2011

Ludovic Phalippou

University of Oxford - Said Business School; University of Oxford - Oxford-Man Institute of Quantitative Finance

Date Written: June 14, 2011

Abstract

Private equity industry associations announce aggregate performance every quarter. Typically these returns are largely above those of public equity markets over long horizons. These numbers are widely disseminated and commented on by the press and have probably played a role in the strong increase in allocation to private equity over the last decade. In contrast, academic studies find returns that are closer to those of public equity (on aggregate). This paper argues that in theory these two results are not necessarily inconsistent. The methodology used in practice can, hypothetically, generate these large returns while the true underlying return may be close to that of the public equity.

JEL Classification: G23, G24

Suggested Citation

Phalippou, Ludovic, Why is the Evidence on Private Equity Performance So Confusing? (June 14, 2011). Available at SSRN: https://ssrn.com/abstract=1864503 or http://dx.doi.org/10.2139/ssrn.1864503

Ludovic Phalippou (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

University of Oxford - Oxford-Man Institute of Quantitative Finance ( email )

Eagle House
Walton Well Road
Oxford, Oxfordshire OX2 6ED
United Kingdom

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